Trafalgar specialise in providing contractor accounting services with limited company and umbrella company services. We offer company and personal tax advice, payroll services, VAT and business banking.

IR35 Advice

IR35 Advice

Whilst the terms of the contract are important in establishing status, the wider picture of work practices and how a contractor or consultant’s business is set up and run will be taken into account.

Key factors in deciding employment status:

  • Control
  • Right to substitute worker
  • Provision of equipment
  • Financial risk
  • Basis of payment
  • Opportunity to profit from sound management
  • Whether part and parcel of the organisation
  • Right of dismissal
  • Employee benefits
  • Length of engagement
  • Personal factors
  • Intention of the parties

IR35 and Remuneration

As a rough guide, if your income is caught by IR35, it could result in a reduction to your net pay by around 15-20%.

As you may undertake several assignments in the year, it is essential to establish your IR35 status for each assignment before deciding how to take your remuneration. It is possible for a company to have some contracts deemed inside and others outside IR35 and this dictates whether your company is eligible to pay dividends.

At TRAFALGAR, we regard each contractor or consultant as an individual, consequently we discuss IR35 compliance and the implications and risks associated with each individual’s actions and circumstances.

The assessment of your company’s IR35 status is ultimately your responsibility but TRAFALGAR can put you in touch with organisations who can give you an independent, professional opinion.

Service Companies

HMRC, to counteract what it states as ‘widespread non-compliance of the IR35 rules’, includes the following:

  • The Self Assessment tax return includes questions as to whether the taxpayer derives any income from a service company and, if so, the amount.
  • The company year end payroll return (P35) is includes detailed questions concerning the application of the intermediaries (IR35) and the MSC legislation.

It is clear that HMRC intend to collate data on PSC that are not caught by IR35 ‘in order to better target compliance activity’.

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